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Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs

Nils Grevenbrock (), Max Groneck (), Alexander Ludwig () and Alexander Zimper
Additional contact information
Nils Grevenbrock: European University Institute
Max Groneck: University of Groningen
Alexander Ludwig: SAFE, University of Mannheim

No 2020-018, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: This paper investigates the roles psychological biases play in deviations between subjective survival beliefs (SSBs) and objective survival probabilities (OSPs). We model deviations between SSBs and OSPs through age-dependent inverse S-shaped probability weighting functions. Our estimates suggest that implied measures for cognitive weakness increase and relative optimism decrease with age. We document that direct measures of cognitive weakness and optimism share these trends. Our regression analyses conrm that these factors play strong quantitative roles in the formation of subjective survival beliefs. Our main finding is that cognitive weakness rather than optimism is an increasingly important contributor to the well-documented overestimation of survival chances in old age.

Keywords: subjective survival beliefs; probability weighting function; confirmatory bias; cognition; optimism; pessimism (search for similar items in EconPapers)
JEL-codes: D83 D91 I10 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-age, nep-cbe and nep-neu
Note: M
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http://humcap.uchicago.edu/RePEc/hka/wpaper/Greven ... pendent-survival.pdf First version, March 24, 2020 (application/pdf)

Related works:
Working Paper: Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs (2020) Downloads
Working Paper: Cognition, optimism and the formation of age-dependent survival beliefs (2019) Downloads
Working Paper: Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs (2018) Downloads
Working Paper: Cognition, optimism and the formation of age-dependent survival beliefs (2018) Downloads
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